Of course, money is one of the most important things when starting a business. No one can argue that. But it’s not the only thing that matters. You can have millions of dollars to start a business but if you don’t have the right expertise, forget it. Lack of business acumen, for one, is a road to doom. Indeed, you need a cache of technical know-how to start and keep the business going.
Still, you can’t overemphasize the importance of funding. This is especially true for new business owners. Funding is one of the first obstacles you need to get over. And if you can’t have a workaround this hill, how much harder will it be for you ready running the business.
But don’t raise that white flag just yet. Know those big companies today, such as Apple Inc., Steve Job’s brainchild, had to look into venture capital and angel investors to get started. Luckily, there are tried-and-tested ways for you to jumpstart your newfound business. Here are five of them.
Your Own Savings
This is one of the best options for you. Think about it. Not only is this easily available (assuming you have money in the bank), but this also means you’re under no obligation to pay someone at a later date in time. You’re free to focus on growing the business. You don’t have to bother about paying interest or even paying back at all. With this, your mind can rest easy, knowing you are fully in charge of the business.
A large percentage of people start their business with the money they have in the bank. By and large, we mean a good 77% of business owners. This can be a good option to opt for if the starting capital is not too much. And of course, if you’ve saved enough over the years. But if that’s not the case, then you will have to widen your options.
When using your personal savings, you have to understand that this is a risk. You might not be able to get back your savings as fast as planned to put you in a precarious state. The rate of getting enough profit is dependent on other factors. To find out how to make a profit easily when starting out. ;
A Day Job
Don’t quit your day job just yet. It’s a workable solution to the problem of finding proper funding. As productivity tools such as email and online communication tools have flourished, starting a business while you’re out working a 9-to-5 job has become viable now more than ever. You can even hire a virtual assistant to get customers flowing into your business.
Slowly, you can use your day job to fund your start-up. Once the profits are stable enough, then you can jump in. Careful though, you don’t want to dive in too soon. Or you can be looking at cash flow issues for a very long time. A good measure is about one to two years with your profits equal to at least a fourth of your salary.
Max on Home Equity
Many people opt for a home equity line of credit for many reasons. One of the purposes you can use it for is starting out your business. Home loans can be a great way to finance a start-up. Not only are the amounts substantial enough to boost your funding, but also you can pay these loans over a long period of time. In short, they’re viable.
A good example is HELOC or home equity line of credit. After paying a good amount of the initial mortgage, you can request a second mortgage using your home equity. The good thing about this option is that the repayment span can last as long as 20 to 25 years. Usually, this is divided into two periods. There is the draw period and then the repayment period. They could both last for as long as 10-15 years. And the interest rates are quite low.
Another good option is peer-to-peer lending. Many small business owners choose this option as it can be processed online. It’s easy to avail. However, you need to have a good credit rating to get access. Usually, this option is for people that have been in business for a while. If your business has been generating impressive revenue over the years, it speeds up the process. Even though the rates are a bit higher than HELOC, this is still an affordable option.
A Part-time Job
If things get unstable along the way, a part-time job can be timely. Know there’s no business that doesn’t face financial issues. Therefore, it’s how you tackle it that matters the most. A part-time job is a good way to get over the hump. You get extra money while profit is still trickling in for your business. It’s a contingency measure that can put you at a lot less risk than getting a loan.
Be aware that no big business started big. Everyone started small. Steve Jobs started his business from the family garage. It’s all a matter of perspective. Usually, it’s the person who doesn’t give up so easily who will get his way. And profit handsomely thereafter.